Labour tries to block new BAE inquiry
British ministers are refusing to cooperate with the US criminal investigation into allegations of corruption against BAE, Britain's biggest arms company, the Guardian can disclose.
More than two months after an official request for mutual legal assistance (MLA) was received from Washington, the home secretary, Jacqui Smith, has not yet allowed it to be acted upon. The US investigators believe the British are being obstructive.
But legal sources said yesterday that the inquiry team had not been deterred by the UK government's hostile attitude. Some have already begun taking statements from key British witnesses.
The formal request for assistance came from the US department of justice earlier in the summer, but Ms Smith has refused to pass it on to the Serious Fraud Office for processing in the normal way.
This is unusual behaviour towards a major ally, with whom legal cooperation is normally automatic. Last night, the Home Office said its failure to pass on the request was "not unprecedented", but could not give any example of similar behaviour.
The SFO possesses important files on BAE gained from its own major inquiry into £1bn of payments to Prince Bandar of Saudi Arabia and other Swiss bank accounts linked to the Saudi royal family. But SFO investigators are not allowed to speak to US authorities until Home Office officials forward the paperwork.
The agency was forced to halt a criminal investigation earlier this year by the then prime minister Tony Blair, who said it threatened the national interest and was upsetting the Saudi regime.
The Home Office's refusal to cooperate with the US followed a similar attempt earlier this year to conceal the payments to Prince Bandar from the international bribery watchdog, the Paris-based OECD, which says it fears Britain is breaching a worldwide anti-bribery treaty to which it is supposedly a signatory.
Norman Lamb, the Liberal Democrat frontbencher, said last night: "There is no justification for delay. This information should be handed over immediately. Again, one is left with the suspicion that by refusing to cooperate, the government is more interested in securing arms deals than in the pursuit of justice.
"It makes a mockery of the government's assertion that they are robustly tackling corruption."
A fresh front against BAE was opened yesterday, when shareholders in the US launched a multimillion dollar lawsuit against the company's directors accusing them of corruption. A spokesman for BAE, which is 50% owned by US shareholders and holds lucrative contracts with the Pentagon, said : "The company intends to vigorously defend any such proceedings."
Prince Bandar, who is also named as a defendant, has not denied receiving cash and a free gift of an aeroplane, but he says it was for legitimate purposes.
Other defendants named in the US suit include former Conservative defence secretary Michael Portillo, who was given a post on BAE's board after helping negotiate an arms deal with Qatar; Sir Nigel Rudd, who recently joined BAE's board as a non-executive director; and Sir Dick Evans, the original architect of the £43bn al-Yamamah arms deal at the centre of the allegations.
The Washington claim has been made in the name of a small pension fund, the City of Harper Woods employees' retirement system, which only holds the equivalent of 14,000 BAE shares, less than 1% of the company's stock. But it is intended that other US shareholders will join in.
The suit claims that BAE's directors have wrecked the company's reputation and exposed it to heavy fines and penalties, by conniving at "improper and/or illegal bribes, kickbacks and other payments", while claiming all the while in public that BAE was a "highly ethical, law-abiding corporation".
They say these "imprudent and unlawful actions have had an inevitable damaging impact and a very negative one indeed for BAE's long-term future". The San Diego law firm won $7bn (£3.5bn) for investors in Enron after its collapse. Last year, it started a lawsuit against the board of BP, on behalf of shareholders, claiming that executives had been negligent in their handling of safety problems.
Evidence published by the Guardian shows that BAE and its corporate predecessors have been making secret payments to Saudi royals, with covert British government support from both major parties, for arms deals stretching back more than 30 years.
Last week, Saudi Arabia signed a fresh arms deal with Gordon Brown's administration worth up to £20bn for BAE's Typhoon aircraft.
The Saudis had been threatening to withdraw from the contract. King Abdullah has also been invited on a state visit to Britain next month. Link
db: BAE and hangers on must be relieved that this corrupt British culture offers them, even now, protection that sad and powerless British citizens - or rather 'subjects' - don't enjoy. British 'subjects' of Her Majesty have little protection conferred upon them by this status. In fact, the general rule is if the US alleges some kind of crime - without a need for evidence - then British subjects are promptly thrown to the wolves and must face US justice alone on foreign US soil.